TO: Honorable Mayor and Members of the City Council
THRU: Tom Kisela, City Manager
FROM: Susan Galvan, Assistant City Manager
1. Subject
title
Three-year agreement with Insight Enterprises, Inc. for Microsoft Enterprise software licenses for all City computers and servers.
body
2. Summary
The three-year Microsoft Enterprise Agreement expired on February 29, 2024. The City’s Information Technology network utilizes Microsoft products such as Windows 10/11, Exchange for e-mail, MS SQL Server for databases, Office for productivity, and software for various Windows servers. This agreement will renew the City’s Enterprise Agreement with Microsoft for three additional years for a total amount of $1,328,378 ($442,793 annually).
3. Recommended Action
recommendation
Approve the three-year agreement with Insight Enterprises, Inc. for a total amount of $1,328,378 ($442,793 annually) for Microsoft software licensing; and authorize the Mayor and City Clerk to execute on behalf of the City.
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4. Fiscal Impact
The expense for this agreement is $1,328,378 over the three-year term and will be funded through:
780.1601.53915.00000 IT Maintenance Annual Software License & Maintenance
5. Strategic Plan Goals
Goal 4: Provide outstanding public service
c: Enhance technology to improve public accessibility to information and services.
6. Discussion and Background
At the City Council meeting on March 12, 2024, the Council gave direction to pursue a one-year agreement with Microsoft in order to allow time for the IT department to perform a deep analysis of its Microsoft licensing quantities. Subsequent to that meeting we have learned that Microsoft does not offer an enterprise agreement for less than three years, nor would we be able to take advantage of the cooperative agreement pricing with the County of Riverside. The enterprise agreement does however, allow us to "true up" or "true down" our license numbers on the anniversary of our agreement date, which will allow us to monitor our usage and make adjustments if necessary.
The IT department has therefore reviewed and analyzed its licensing numbers again and has come up with 933 licenses (an annual savings of $6,511) that must be procured in order to continue to maintain operations as they are. The current agreement expired on February 29, 2024, and we are operating under a grace period which will end on May 27, 2024 at which point our Microsoft tenant and data will be removed.
The City makes extensive use of Microsoft software and services to conduct city business. The City uses all of the Microsoft Office Productivity Suite (Word, Excel, PowerPoint, Access, Project, Visio, Teams, Outlook, etc.), Microsoft Exchange for email, SQL Server for relational database management, server operating systems for over 140 servers, desktop operating systems for 862 desktops/laptops, and Azure cloud-based infrastructure (servers, storage, and networking).
For a city the size of Orange, the best strategy for procuring Microsoft licensing is through an Enterprise Agreement which covers all city users and devices and allows for more efficient distribution of products and services. In addition, all upgrades are included for the duration of the agreement and IT staff will have access to Microsoft technical support for any software or service incidents.
The Microsoft Enterprise Licensing Agreement negotiated by the County of Riverside (Riverside County Cooperative agreement: PSA-0001526/RIVCO-2020-RFQ-0000048), as a result of their solicitation process has been used by more than 900 organizations in the State of California. This program allows cities like Orange to purchase at the same price point as the County of Riverside. Insight Enterprises, Inc. (Insight) provided a cooperative agreement quote (County of Riverside Microsoft contract) for $1,328,378 over the three-year term.
This proposed agreement will provide Microsoft software licensing through February 28, 2027 at a cost increase of 27% over the current agreement. Much of the increase from the prior three-year agreement can be attributed to the City’s growth in license use, including an additional 100 Microsoft 365 licenses, additional server licensing, in addition to annualized cost increases.
Staff is recommending the City obtain the renewed Microsoft Enterprise Agreement from Insight for a three-year term for a total of $1,328,378. The agreement is payable in three annual installments of $442,793. Funding is currently available in the IT operating budget for the first installment. Future installments will be budgeted as part of the annual budget process.
We anticipate that this agreement will increase in the next fiscal year as we intend to add several new servers and SQL Server licensing costs when replacing our video surveillance platform. This inevitable increase has been budgeted for in the next fiscal year.
7. ATTACHMENTS
• Agreement with Microsoft
• Quote from Insight Public Sector